#6 RATINGS & REVIEWS -with Homestars Founder & CEO Nancy Peterson

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Can you spot fake online reviews? Consumers provide online ratings and reviews to share their opinions and stories about brands. This can provide us with valuable information regarding our purchase decisions. Unfortunately not all reviews are credible. In this episode we learn from Homestars CEO Nancy Peterson about how to write and interpret product ratings and reviews. 

References & Links

Nancy Peterson & Homestars

Online Review Websites

Academic Research

  • http://blog.mikezhang.com/files/gamereviews.pdf
  • https://s3.amazonaws.com/academia.edu.documents/33947213/Tried_and_tested-_The_impact_of_online_hotel_reviews_on_consumer_consideration.pdf?AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1549288826&Signature=bSTRQ8kK4mTYfrKbdidwF4QwJ5M%3D&response-content-disposition=inline%3B%20filename%3DTripAdvisor_research.pdf
  • https://www.researchgate.net/publication/4896968_When_Good_Brands_Do_Bad

Fraudulent Reviews

Talk About Talk

Interview Transcript

Dr. Andrea Wojnicki: Thank you so much for agreeing to do this interview.

Nancy Peterson: Oh, I’m excited to be here.

AW: Me too. Okay. I have, I guess, an elementary question to ask first, do you have any tips for consumers when they are writing reviews?

NP: Okay, how about the first tip: Write It. Dead serious. People think they’re going to write one. They’re really upset about something, or they just had the best experience ever. And they really want to thank the service or the retailer or whatever. And guess what life gets in the way the distractions and we just don’t get to it right. And so the biggest challenge I had when I started Homestars was really just how to trigger those – make it so easy for people to express themselves. It’s still– word of mouth is still King and Queen. And the whole point of reviews is to share your experiences. The great and the absolute crabby –with more people. People just don’t make the time.

AW: Yeah, I know from personal experience. So now imagine that someone had either been very positive or a very negative experience with a contractor painter, a landscaper. What makes for a good review?

NP: people love to read stories. That makes it way more authentic. If you’re — particularly if you’ve spent quite a bit of time and money with this pro

AW: Right.

NP: So put yourself in the audience’s shoes what would they find the most useful about you know your experience and what you valued in the work being done.

AW: So what about including for example, all positive things or all negative things?

NP: People are cautious about writing negative. 90% of our reviews are either 10s or zeros. People are loath to put sevens or fives on their reviews. They don’t want to undermine a contractor, because  they know how important referrals are for their business. Right?

AW:  That’s why it’s been really interesting because, from my perspective, my research on word of mouth. People are more likely to talk when it was extremely positive or extremely negative. But if it’s in the middle, it goes way down. And it’s amplified, according to this research, on the negative side. So on your website, though, it’s the people maybe they’re thinking that the not quite 10 out of 10s are going to hurt people that they don’t really feel like they want to hurt them unless it’s really horrible, in which case they’re going to give them a one?

NP: Yeah, interesting. And we set up the ability for people to anonymize their online name because –rather than make up a name and a location, because it’s going to locate you, you know, “Nancy in North York,” right? It’ll just say, “anonymous user.”  We will have their email, obviously, to be able to verify and reach out to them. Then they can publish something that’s negative without fear of repercussion.

AW: Well, I have been in all the situations that you’re mentioning, right? Like where I’ve had a mediocre experience, and I wouldn’t waste my time writing anything, but I will write complaint letters, I will write negative reviews. And I will write incredibly positive reviews. And recently on Amazon when I was buying things they prompt you ….“how many stars would you give this? How many stars would you give this?” I think I had something that I was thrilled with. And I felt like I wanted to reward the seller or the manufacturer, so I gave it a five out of five and then some I gave a one if it was horrible. And then I was like, “Isn’t that interesting that I’m on both sides of the scale only?” And then there was a Kleenex box that I bought that was cute. But I gave it a four out of five stars. And then it says, what do you have to say? And I said, “it’s great. It’s a good price, but it’s just a Kleenex box!” So back to your initial comment, people just don’t have time.

NP: And so that’s, I think, why you get the extreme in reviews and so few people taking the time to write them in the first place.

AW: So how do you inspire people – as a company whose business is built on customer ratings? How do you inspire people to do that?

NP:  through our marketing programs, we have newsletters and our automated transactional emails that get sent just because they’ve been contacting a contractor through the messaging. We will ask them to rate the contractor. And organically, when we’re doing trade shows kind of thing. That’s how we started. We were in home shows, asking homeowners to go on the site. We’d have kiosks setup so they could read the reviews right then and there.

AW:  Amazing

NP: Those were the early days.

AW: Yeah, you needed to populate your website with reviews. Right?

NP: And you know, the biggest fear they had is how do you make sure that they’re not fake reviews?

AW: Right, we’re gonna get into that that’s a that’s a scary thing for you for the viability of your business for the contractors themselves assuming they’re not the ones doing it right for consumers who don’t know what to believe that’s a big thing to unpack there. Do you encourage the contractors and other service providers that are indexed on Homestars to ask for reviews?

NP: Yes, we do.

AW:  I would imagine that that would be incredibly effective. So I have had service providers who I’ve hired through Homestars. On their way out they don’t ask me to write a review. And I’ve actually told them. “you should be asking me to write a review because I just thanked you profusely. I’m low hanging fruit for you.”

NP:  They’re just the same as us. You know, they’re just people. That’s the biggest mistake consumers make is that they just think that they’re not human. You know? And so, like the relationship — the most difficult part about bringing somebody into your home to do work is that relationship. There’s a lot of trust.

AW: That’s true. And never thought of that, I guess, especially when they literally come in the front door.

NP: And we have a videotape of a homeowner ….This is hysterical,… who had a camera on their front porch and signed up for a lawn service. The guy pulled up in their van got out and did like a two-minute job. And then he sat in there for half an hour. And then he was writing up the bill. Obviously he was working for a big company – so they were just “on the clock.” Then shoved their hundred-dollar bill in the in the door slot. And we had that all on camera. It was so funny.

AW:  That is awesome.

NP: We’re trying to find ways of exploiting that ….

AW: These guys should know that there are cameras everywhere.

NP: Right.

AW: Before we move on, I’m just wondering if there are any trends in ratings and reviews that you notice in terms of any dimension? So it could be gender? it could be how much the service typically cost? So, do people write more when it costs more?

NP: Well I can tell you some of the categories with the largest percentage of fraudulently submitted reviews: Demolition. Locksmiths.

AW: what?

NP: Yeah. Categories with the lowest percentage of 10-star reviews are hardware stores (we know who they are, it’s  just that probably, you know, it’s tough to get those 10s!). Garden centers.  Snow removal.

AW: Because there’s always one time in the year when you stepped out and there was snow on your porch!

NP:  That’s right. And those snow removal guys, some of them are pretty aggressive and you don’t want to get on the wrong side of some of them. Some of them. We’ve had some odd situations internally with threats from snow removal …, you know, we have a customer support team. And yeah, so I mean, it’s not all of them. It’s just a couple of stories.

AW: You have all sorts of stories and your learning curve was probably vertical when you went into this.

NP: I guess the biggest surprise in the early days was — we’d have a company that the husband and wife would come in to the office and bold-faced lie to us that none of their reviews were fake, when we’d had an anonymous tip. And they had some very clever ways of hiring students and going to internet cafes and all the rest of it. So we had this anonymous tip and so through a lot of effort, ….

AW: why don’t you just put the effort in to actually doing the job, right?

NP: You have those conversations. And they came in to tell us it all. They swore that all their reviews were legitimate. And it was disappointing because they were a nice couple. And, you know, I just thought, why are you going to all this elaborate effort? So that was disappointing. And that’s when I just realized that anybody can lie. So ….number one, I’ve said this right from the beginning: we’re here for homeowners. We’re here to support them. And then in addition, we’re here to support the best companies.

AW:  right. There has to be a hierarchy there. But that makes sense because if you are first and foremost holding the homeowners up at the highest level of the hierarchy, they’re going to be dependent upon you to identify the top service providers

NP: right so yeah, they’re a close second. And we have to be willing to fire contractors. In other words, not advertise them.

AW: You’re forgoing revenue when you fire contractors.

NP: And so what we created was a star score algorithm about four or five years ago. And there’s a backstory to how that came to be. So we were hiring programmers to help us solve this. When you look at the average rating system for most websites, it basically takes any review ever published, right? Whether it’s a five, five out of five or 10 or out of 100, like rotten tomatoes, and then how many reviews they’ve gotten over, you know, whether it’s one year or 10 years and then dividing it by the denominator. That’s a very simplistic rating system and what would happen is–  a company would be doing really great work. And then what if they fell off the apple cart and stop doing really great work? Now they’ve got an average rating that’s really really high, but then their recent reviews are low. And that actually happened to us. Sure, and the company that was historically good, and then and then recently wasn’t good, ended up taking money from homeowners and taking off with that money. So we needed to rethink how we showed a rating system because not everybody’s going to go and research and read the reviews even though those reviews were at the top of their listing.

AW: So does amazon for example, do what you were saying at the beginning, which is the number of stars on average and then in brackets, it’s the number of reviews that they’ve had and it’s just the

NP: I’m not sure if they’ve changed over time. I mean, they’ve gone through so much to try to reduce fraud because they’re a closed system. You have to be a buyer to purchase something – to go and rate it. They’ve got a closed rating system. By virtue of that, they are safe guards. However, they’ve got into some fraud where companies would go and reach out to you …and say, “Hey, we’re going to give you this at a severe discount or give it to you for free if you rate us.” And so they got into a whole bunch of hot water over that because — their marketplace in particular –

AW: they were hiring kids. Not Amazon, but another company, would ship a product to a kid like a teenager who would open the box and maybe keep it as a gift or return it or whatever however the system worked and then write a review and that was and then they get payment ..

NP: so every system has its whole loopholes and so everybody will get more and more clever about the faking it. But this star rating system, star score, that we launched, allowed us to use other data points. So it’s not just the published reviews, it’s the ones where you wrote a review whether it’s a seven or three or zero and a company’s asking you to remove it. If we see patterns that way. And the companies know this. They’re harassing you to remove the review or bribing you to remove the review. However they’re doing it. And you remove the review. Their score drops automatically, without us doing anything. It’s just our algorithm. It will just start to denigrate their score.

AW: How can I as a consumer, whether I’m checking out a restaurant or hotel on TripAdvisor or to hire someone to paint my house on Homestars, … How can I tell whether a typically glowing review is credible?

NP: So I love this. if you’re reading some reviews, whether the company has five reviews or 500, go and pick three or four review that you think are really interesting and perhaps in your area. Ask the company that you want, to each out to those specific consumers, homeowners. I would call them. Because if they are really true to their work, then those consumers would be happy to talk to him.

AW: That’s for big jobs. Yeah, I agree.

NP: You’re spending 10, 15, $20,000 of your money. I’m sorry. Like, on the other end, if the contractor calls me, I know you wrote that review, but somebody wants to ask you more about it. I would say, “for sure!” I just love the idea that the consumer is taking that next step to say, Hey, I’m going to reach out to that person and any contractor worth of salt is going to be able to have a handful of consumers that they feel comfortable with.

AW:  It’s almost like taking the effort to write a review though. It’s like we’re all so busy and I yeah, I’ve been in situations where people have said, I’ve got a list of referrals and they’ll kind of show you quickly, briefly. They’ll show you … so what you’re recommending makes a lot of sense for larger purchases, but for something small. I’m just wondering, are you guys privy to any trends either in patterns of ratings or in how reviews are written the verbal part?

NP:  If there’s anything that is a tip off that this is, …, there are now linguistic patterns that can be tracked. They see patterns that are repetitive. But even somebody reading a whole bunch of reviews as they’re doing the research can would be able to see that as well okay so again, by the same choice reading the see me writing the same thing in a different way that’s why we also show how many reviews of this person also written. So you can go read their other reviews as well. See what type of comments they’re making and what other work they’ve done. Are they always 10 out of 10? Or are they giving a variety of reviews? Yeah, and what are they saying on those other reviews? So somebody has to go through a lot of work to go and create a big profile and then go in and we automate randomly, so every x reviews on a company’s profile. We will ask the consumer to validate that they’ve hired a contractor. We don’t store that information. It just it’s just a way for us to validate they actually hired the company

AW: Right. Oh that’s excellent. That was one of my questions. How does Homestars vet reviews?

NP: There are more data capture ways that we’re looking at in the future. But so we outright reject, I don’t know,  something as high as 15%, 13 to 15% before it even hits the moderator. So it’ll go through either a verification will want somebody to send us something or it’s out right…

AW: And so there are other things though, like profanity or just

NP: outright rejected contractor accounts. They’ve  already signed up for their account. They are writing reviews on their own. Sometimes they’re just doing it to test the system and that’s a good thing. So they’re like, “Oh, this is good. I trust them. Homestars is not posting crap.” So that’s a plus for them. Just don’t keep doing it.

AW: And yeah, okay, stop. Because we caught you now. Just stop that. What’s the best way for a company or a contractor or whoever to deal with a negative review?

NP: It’s always a 24-hour rule for anything, because you may get upset when you see a negative review. And they’re human, and nobody’s perfect. So say the same thing. Nobody should have 10/10 on everything. It’s just impossible. So you have to be open to just receive feedback and accept it.

AW: So do you encourage them though, to reach out to the customer?

NP: Yes, on everything, everything positive or positive and negative.

AW: If you’re a consumer and you were…

NP: you have to just wait like how critical it is. I mean, if you’re spending $300 on a face cream, you want to make sure that it’s good face cream as an example. So you want to go to different stores. It is not just Amazon, but other sites to corroborate this. The same with a hotel review, not just TripAdvisor, but Hotels.com, and other companies that are aggregating data.

AW: That’s a great tip though I rarely do that,

NP: you know, YELP you know, has a vast database and a breath lot of good things about Yelp, you know, some people criticize contractors that we work with, criticize Yelp. However, I think they’ve done a really great job in trying to protect consumers.  Maybe to the one extreme. They weren’t even allowing the restaurants to respond to the review. So that was early days, but they fixed that a long time ago. And they obviously allow responses and they really penalize companies that bribe. So you cannot, as a restaurant or hotel, say, “we will give you a gift cert if you go. So, you know, I admire you for that we’re always looking at her to check those things,

AW: but good. Good on them.

NP: I’d’ like to go back to your comment… I mean, when you’re spending a certain amount of your hard-earned money and there’s and there’s more risk involved in the downside of a bad job. As an example bringing in a contractor to fix maybe a leak in your kitchen and they open up a wall. It might be a $500 job, but it could end up causing $2,000 worth of damage. So it’s not just the cost of the job that you’re talking about him

AW: right. There was a ripple effect there sometimes unfortunately. So as you’re mentioning many of the other rating websites that exist in different categories and some of them are general I guess, are there any trends in terms of consumer ratings and reviews?

NP:  the overall trend in the last five to 10 years is that every single e commerce platform will have some kind of review platform attached to it. Just because people want to read what other people think about products. And even Facebook has gotten into reviews.

AW: So anyone that’s selling anything will show somehow either embedded on their side,

NP: Lawyers are collecting reviews, it’s transformed every single industry, b2b. b2c. When I first got into this business, you know, in the mid 2000s,

AW: I want to hear the story.

NP: It was pretty much books and movies and travel was just starting. TripAdvisor had just was just nascent in its growth Yelp started like two years before home star so now and it’s you know, reviews are everywhere and they’re good websites like bizarrevoice and trustpilot that will aggregate reviews for… Create a widget. So of Nike, (I’m using them because they’re just a shoe that comes to mind.) But if he didn’t have a way to aggregate reviews from their buyers, they would put code on like a bizarrevoice or trustpilot and they could get Nike buyers and the checkout to write reviews. And so that he doesn’t have to go and build a specific website and be a review aggregator like, that’s not their expertise, right? There’s, third party companies that can do that, and have all the policies and procedures

AW:  they go direct to their customers. And then it’s aggregated. Fascinating. Yeah, and they have a big enough portfolio that they even want to know what people are saying, right? So it’s almost like market research for them at the same time,

NP: correct.

AW: Fascinating. Yeah.

NP: So we’ll see a lot more sites like boutique hotels will ask you for review at the end, could you rate us and then they’ll publish that on their own platform. Now they can decide not to publish it as well. Or they could say, hey, Andrea, how would you rate your experience from zero to 10?  And if it’s nine or 10, they’ll ask you for review. And if it’s a lower the last few for feedback so they can improve.

AW: And can you just share? I should have asked you this at the very beginning. But share the story of how and why you started Homestars. I heard you were managing your own home renovation.

NP: I did my own home renovation. It was early 2000, I guess. And, you know, we were working at Kraft and I just kind of … went through that process of four or five months of planning and knowing nothing about how to…and it wasn’t like that massive. I wasn’t building an addition. But it was still replacing windows and furnace and floors and the kitchen. It was really nerve racking – the whole planning. I kind of went through that and thinking, you know, Dave and I were working crazy hours and there’s no resources. There was word of mouth and there was the phone book. There was yellow pages or a phone book. That’s not a way to make decisions on who are you going to invest in? Right? Whether it’s a general contractor? electrician, …our kitchen…

AW: You can you ask your friend next door? That’s one data point, right? Just in terms of the word of mouth. And most of the time when people spend a lot of money, I know this from some my word of mouth research. If they spend a lot of money on something, there’s cognitive dissonance, they’ll report to you that they are thrilled because, well it better be. Because I spent $50,000, right, that’s what they’re thinking they’re forgetting all the all the nitpicks

NP: Greatest example, was a friend of mine had a shared driveway with a neighbor and the neighbor recommended a Driveway Paving company and it ended up because it was the price right and so he went online and looked at the reviews and they were terrible. So great price, guess what happens two months later? It all falls apart six or so you end up spending three times as much because you need to fix the bad work. Hmm. So you hire somebody because of their price, but you’re not getting the quality workmanship and that’s really important. I’ve seen that with pavers and zone.

AW: So you had this epiphany, though about your own personal experience.

NP: Oh my God, we spent 10s of thousands of dollars in market research to come up with, you know, with our product teams and plants and operations coming up with formulas for you know, cream cheese and low zero fat or low-fat cream cheese. For a $4.99 tub of cream cheese. And yet you’re spending 10s of thousand dollars every year on your home and there was nothing out there. So that’s, that’s what was ruminating through my head and it was a mat leave. And that gave me the time to step out of the day to day work. And that’s where I said to Dave, I said, “I really want to do this. You know, I’m at this point in my career where I just feel like it’s just a huge need and it would be really fun and exhilarating to start a business.”

AW: So would you say you’re a natural entrepreneur?

NP: No I don’t think I was. It took me a long time to fill the shoes of an entrepreneur. And there was no resources at the time. Today, there are tons of resources. There weren’t meetups, and there weren’t incubators, there wasn’t the DMZ there. And it was also uncomfortable being female. Going out and raising money. Because nine out of 10 of the money was male or even maybe …yeah. So I ended up bringing on a co-founder (in title only). He was a very minor stakeholder, but great partner in crime. He was a search engine marketer and I really –still — a great friend. That was really foundational. It was a lot easier to go and ask for money because I had a VC who said me point blank, “you need a co-founder.” And you know, and just think that being a female was a detriment that all the people around the table …

AW: That’s what the Dropbox guy said. Do your remember? He went for funding and they said, “Who’s your co-founder?” And he was like, “oh God.” and he went to a friend. Remember that? And there is something to be said about a good founding team that’s interesting. Is there anything else you want to add? In terms of ratings and reviews?

NP: I would just tell the audience I’d be suspicious about a company that’s been around for a long time and has no reviews on the Internet. It doesn’t matter on what source: Google, Homestars, any platform at all. That’s kind of weird. And doesn’t have a website. So if they’re a one-person show, maybe that’s the reason. You just have to be cautious. I would also say that reviews aren’t the only source of homework. You have to do your homework and make sure that you’re checking to make sure that they’ve got insurance. If you’re doing a big job,  see their insurance.  And you should never give large deposits for work. Why do you need the deposit? Have that breakdown and make it very specific. It should be a very small.  Under … 15% or whatever, just to get the project going. The materials etc. Yeah, so. Keep your eyes open. And always, if something is seems off, its off. Check, check into it. If you’re getting funny vibes from a company then just pause. Homeowners aren’t perfect either. They don’t have an idea of how much things cost.  You get what you pay for. So if something’s cheap. Then you might get what you pay for. And then on the other hand, contractors that are managing expectations, like when am I going to show up? if I’ve got the time …it’s better just to say no to the work, then try to please everybody.

AW: Okay, I’m going to move on to the five rapid fire questions. First question is, what are your pet peeves?

NP: I’d say my pet peeve is arrogance. Yeah, I’d much rather talk to somebody that is as good at listening as they are talking right now-  filling the room with their own story.

AW: Second question: what type of learner are you? visual auditory kinesthetic, or

NP: I’ve had to learn all of them. You know for me, doing is way better than being told what to do. I love to read. So like for instance, we didn’t have a head of sales for a while. So I badly filled the role. But I started reading a lot of books and one book in particular. Then I had my leadership team read the book Sales Acceleration Formula, by the head of sales at HubSpot, who was an engineer. He handled it very much like an engineer,  just breaking down the objective ways, approaches, of really building a world class sales team. From zero to a million in sales. So it was great, great reading for all of us. Just to hone-in on the type of quality…

AW: you can apply it to a completely different industry?

NP: Yeah, really, you read and then you discuss. That’s how you learn. I love that and getting other people to align because you can’t do it yourself.

AW: You are very humble. Back to the pet peeve thing. Yeah, I can tell by the way you’re talking. Third question. Introvert or extrovert?

NP: More extrovert, but I do like my downtime. And just, you know, just shutting the door and going for a walk. I love meeting new people, love learning new things. Love travel. And if I’m in a room of people are going to be talking to them.

AW: I’m not surprised. Okay, fourth question, communication preference for personal conversation.

NP:  I find people don’t call anymore I get so few phone calls. You get so much bombarded with email. de facto is everybody wants to buddy well, copy everybody.

AW: And but, you know, if you wanted to get a hold of maybe one of your kids or your husband or a friend for social plans, what would you typically use?

NP:  Text. And then just call to get it done. You know, because email is just brutal.

AW: Last question. Is there a podcast or a blog or an email newsletter that you recommend the most?

NP:  So Tim Ferriss I’ve been enjoying.

AW: That is phenomenal.

NP:  Yeah, I don’t have I’ve been hearing more and more podcasts. So I’m, I feel like I’m just kind of a newbie to the podcast listening. But I love listening to podcast. I go for a run. And when I’m working out. In the car is great.

AW:  It is great in the car.

NP:  audio books. I love audio books. Drive by Daniel Pink. I just listened to that. Amazing book.

AW: Okay, so how can TalkAboutTalk listeners connect with you? So maybe they want to work for you? Or maybe they want to sign their company up for Homestars. How can they connect with you?

NP:  LinkedIn is great. Twitter. Don’t go on there as much.

AW: I will put the links for those social media connections on the show notes. Thank you so much for sharing your time and your expertise. Nancy, it’s great seeing you again.

NP: I was excited to see you too.

AW: And I’m so honored that you took time out of your crazy crazy schedule….

 

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